Vca 8-K VCA Antech, Inc. Reports First Quarter 2012 Results

Exhibit 99.1

VCA Antech, Inc. Reports First Quarter 2012 Results

• First quarter revenue increased 15.3% to a first quarter record of $409.5 million
• First quarter gross profit increased 17% to $93.4 million
• First quarter diluted earnings per common share of $0.40
• First quarter adjusted diluted earnings per common share of $0.34

LOS ANGELES--(BUSINESS WIRE)--April 26, 2012--VCA Antech, Inc. (NASDAQ:WOOF), a leading animal healthcare company in the United States and Canada, today reported financial results for the first quarter ended March 31, 2012 as follows: revenue increased 15.3% to a first quarter record of $409.5 million; gross profit increased 17% to $93.4 million; net income was $35.2 million and diluted earnings per common share was $0.40.

The first quarter of 2012 included a gain of $5.7 million on our 20% interest in Associate Veterinary Clinics (“AVC”) held at the time we became the sole non-veterinarian shareholder of AVC. Excluding the gain, adjusted diluted earnings per common share was $0.34.

Bob Antin, Chairman and CEO, stated, “I am extremely pleased with our results for the quarter. This is the third consecutive quarter of improved organic revenue growth in both our Animal Hospital and Laboratory segments. In addition, we experienced margin expansion in each of these segments. Given these positive results, we remain optimistic with respect to our outlook for 2012.

“Animal Hospital revenue in the first quarter of 2012 increased 17.1% to $316.1 million driven by acquisitions made in the past twelve months and same-store revenue growth of 3.5%. Our Animal Hospital gross margin decreased slightly to 14.4%, compared to 14.7%, for the prior year quarter, and our Animal Hospital operating margin declined to 12.0%, compared to 12.4%, for the prior-year quarter. Our same-store gross profit margin increased to 14.9%, from 14.8%. During the quarter, we increased our investment in AVC which had historical annual revenue of $96.0 million. We also acquired nine independent animal hospitals which had historical combined annual revenue of $12.2 million.

“Laboratory revenue in the first quarter increased 6.5% to $84.7 million driven by both an increase in the number of requisitions and the average revenue per requisition. Our Laboratory gross profit margin increased by 1.7% to 47.9% and our operating margin increased 1.1% to 38.9%.

“Revenue from our other operations reported in our All Other segment increased $7.2 million in the first quarter to $26.3 million, which related primarily to the acquisition of Vetstreet in August 2011.”

Conference Call

We will discuss our first quarter 2012 financial results during a conference call today, April 26^th, at 4:30 p.m. Eastern Time. A live broadcast of the call may be accessed by visiting our website at http://investor.vcaantech.com. The call may also be accessed by dialing (877) 293-5492. Interested parties should call at least ten minutes prior to the start of the call to register. Replay of the webcast will be available for ninety days by visiting the company’s website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Among the forward looking statements is our statement of optimism about our outlook for 2012 and other statements in this press release addressing our plans, expectations, future financial position and results of operation. These forward-looking statements are not historical facts and are inherently uncertain and out of our control. Any or all of our forward-looking statements in this press release may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Actual future results may vary materially. Among other factors that could cause our actual results to differ from this forward-looking information are: the continued effects of the economic uncertainty prevailing in regions in which we operate; our ability to execute on our growth strategy and to manage acquired operations (including Vetstreet); changes in demand for our products and services; fluctuations in our revenue adversely affecting our gross profit, operating income and margins; and the effects of the other factors discussed in our Annual Report on Form 10-K, Reports on Form 10-Q and our other filings with the SEC.

About VCA Antech

We own, operate and manage the largest networks of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country and we provide the largest online communication, professional education and marketing solution to the veterinary community. We also supply diagnostic imaging equipment to the veterinary industry.

VCA Antech, Inc.
Consolidated Income Statements
(Unaudited)
(In thousands, except per share amounts)
	Three Months Ended
	March 31,
	2012			2011
Revenue:
Animal hospital	$	316,125		$	269,941
Laboratory		84,730			79,549
All other		26,325			19,096
Intercompany		(17,715	)		(13,463	)
		409,465			355,123
Direct costs		316,086			275,345
Gross profit:
Animal hospital		45,556			39,553
Laboratory		40,551			36,730
All other		8,667			4,458
Intercompany		(1,395	)		(963	)
		93,379			79,778
Selling, general and administrative expense:
Animal hospital		7,057			6,083
Laboratory		7,598			6,636
All other		9,283			3,556
Corporate		15,113			9,908
		39,051			26,183
Loss on sale and disposal of assets		523			89
Operating income		53,805			53,506
Interest expense, net		4,087			4,548
Business combination adjustment gain		(5,719	)		-
Other (income) expense		(207	)		58
Income before provision for
income taxes		55,644			48,900
Provision for income taxes		19,323			18,933
Net income		36,321			29,967
Net income attributable to noncontrolling interests		1,076			1,128
Net income attributable to VCA Antech, Inc.	$	35,245		$	28,839
Diluted earnings per share	$	0.40		$	0.33
Shares used for computing diluted
earnings per share		88,055			87,245

VCA Antech, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
	March 31,		December 31,
	2012		2011
Assets
Current assets:
Cash and cash equivalents	$	72,716	$	63,651
Trade accounts receivable, net		63,849		58,279
Inventory		52,697		48,661
Prepaid expenses and other		24,091		21,883
Deferred income taxes		26,854		26,310
Prepaid income taxes		6,087		18,373
Total current assets		246,294		237,157
Property and equipment, net		377,082		370,646
Other assets:
Goodwill		1,338,569		1,237,607
Other intangible assets, net		112,285		92,403
Deferred financing costs, net		5,188		5,435
Other		50,173		52,120
Total assets	$	2,129,591	$	1,995,368
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	34,920	$	32,571
Accounts payable		40,136		37,797
Accrued payroll and related liabilities		55,829		42,658
Other accrued liabilities		54,402		43,968
Total current liabilities		185,287		156,994
Long-term debt, less current portion		621,898		586,282
Deferred income taxes		109,361		101,229
Other liabilities		34,800		25,947
Redeemable noncontrolling interest		6,950		6,964
VCA Antech, Inc. stockholders' equity:
Common stock		87		87
Additional paid-in capital		378,609		361,715
Accumulated earnings		780,903		745,658
Accumulated other comprehensive income		1,482		418
Total VCA Antech, Inc. stockholders' equity		1,161,081		1,107,878
Noncontrolling interest		10,214		10,074
Total equity		1,171,295		1,117,952
Total liabilities and equity	$	2,129,591	$	1,995,368

VCA Antech, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
	Three Months Ended
	March 31,
	2012			2011
Cash flows from operating activities:
Net income	$	36,321		$	29,967
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		16,562			13,380
Amortization of debt costs		322			388
Provision for uncollectible accounts		1,146			1,297
Business combination adjustment gain		(5,719	)		-
Loss on sale and disposal of assets		523			89
Share-based compensation		4,183			1,068
Deferred income taxes		4,212			8,035
Excess tax benefit from exercise of stock options		(187	)		(185	)
Other		(391	)		171
Changes in operating assets and liabilities:
Accounts receivable		(4,606	)		(6,933	)
Inventory, prepaid expenses and other assets		(2,939	)		1,417
Income taxes		12,698			9,922
Accounts payable and other accrued liabilities		814			(8,120	)
Accrued payroll and related liabilities		10,725			10,734
Net cash provided by operating activities		73,664			61,230
Cash flows from investing activities:
Business acquisitions, net of cash acquired		(65,472	)		(5,467	)
Real estate acquired in connection with business acquisitions		-			(1,200	)
Property and equipment additions		(16,072	)		(12,034	)
Proceeds from sale of assets		36			22
Other		193			(131	)
Net cash used in investing activities		(81,315	)		(18,810	)
Cash flows from financing activities:
Repayment of long-term obligations		(34,626	)		(7,301	)
Proceeds from the issuance of long-term obligations		50,000			-
Borrowings on revolving credit facility		50,000			-
Repayments on revolving credit facility		(50,000	)		-
Payment of financing costs		(101	)		-
Distributions to noncontrolling interest partners		(719	)		(652	)
Proceeds from issuance of common stock under stock option plans		2,621			1,175
Repurchase of common stock		(579	)		(2,337	)
Excess tax benefit from exercise of stock options		187			185
Other		(151	)		(345	)
Net cash provided by (used in) financing activities		16,632			(9,275	)
Effect of currency exchange rate changes on cash and cash equivalents		84			128
Decrease in cash and cash equivalents		9,065			33,273
Cash and cash equivalents at beginning of period		63,651			97,126
Cash and cash equivalents at end of period	$	72,716		$	130,399

VCA Antech, Inc.
Supplemental Operating Data
(Unaudited - In thousands, except per share amounts)
Table #1
Reconciliation of net income attributable to	Three Months Ended
VCA Antech, Inc., to adjusted net income	March 31,
attributable to VCA Antech, Inc. (1)	2012			2011
Net income attributable to VCA Antech, Inc.	$	35,245		$	28,839
Business combination adjustment gain (2)		(5,719	)		-
Adjusted net income attributable to VCA Antech, Inc.	$	29,526		$	28,839
Table #2	Three Months Ended
Reconciliation of diluted earnings per share to	March 31,
adjusted diluted earnings per share (1)	2012			2011
Diluted earnings per share	$	0.40		$	0.33
Impact of business combination adjustment gain (2)		(0.06	)		-
Adjusted diluted earnings per share	$	0.34		$	0.33
Shares used for computing adjusted
diluted earnings per share		88,055			87,245
(1) Management uses adjusted net income and adjusted diluted earnings per share, and its components among other factors, to measure the performance of the overall Company.  Further, we believe that investors’ understanding of our performance is enhanced by disclosing these measures. Adjusted net income and its components and adjusted diluted EPS measures are not, and should not be viewed as substitutes for, U.S. generally accepted accounting principles (GAAP) net income and its components and diluted earnings per share.
(2) As a result of the acquisition of a controlling interest in AVC, we recorded a gain for the increase in value of our previously held interest in AVC, which we acquired in 2008.

VCA Antech, Inc.
Supplemental Operating Data
(Unaudited - In thousands)
	As of
Table #3	March 31,			December 31,
Selected consolidated balance sheet data	2012			2011
Debt:
Senior term notes	$	616,094		$	573,984
Other debt and capital leases		40,724			44,869
Total debt	$	656,818		$	618,853
	Three Months Ended
Table #4	March 31,
Selected expense data		2012			2011
Rent expense	$	16,045		$	13,271
Depreciation and amortization included
in direct costs:
Animal hospital	$	11,226		$	9,799
Laboratory		2,468			2,369
All other		1,502			410
Intercompany		(362	)		(301	)
		14,834			12,277
Depreciation and amortization included in selling, general and
administrative expense		1,728			1,103
Total depreciation and amortization	$	16,562		$	13,380
Share-based compensation included in direct costs:
Laboratory	$	123		$	78
Share-based compensation included in
selling, general and administrative expense:
Animal hospital		341			218
Laboratory		385			240
All other		152			55
Corporate		3,182			477
		4,060			990
Total share-based compensation	$	4,183		$	1,068

CONTACT:
VCA Antech, Inc.
Tomas Fuller
Chief Financial Officer
310-571-6505